IPod as front end is fine. Posters are correct to suggest bypassing the built-in DAC as it is marginal.
The Naim DAC-V1 is great and found used for between $1200-$1600. I own one and it can be used as a preamp with volume.
Paired with Elac Navis powered speakers $2700 new would be sweet. Balance of the monies for stands and cabling.